Quick question - inheritance tax...

[Ken Figenus]

Devil2575 said:

The reality is that if we wish to pay less tax then the state needs to do less.

The state already does less, but the tax is the same. Its cut cut cut wherever they can. Why on earth could we afford libraries, local police stations, school music lessons, dentists, a half manned CPS, rubbish collection more frequently than twice a leap year, social services that could spend more than 15 minutes with old people etc etc We are certainly not paying any LESS are we? Where does it all go?

[JacquesMesrine]

Ken Figenus said:

The state already does less, but the tax is the same. Its cut cut cut wherever they can. Why on earth could we afford libraries, local police stations, school music lessons, dentists, a half manned CPS, rubbish collection more frequently than twice a leap year, social services that could spend more than 15 minutes with old people etc etc We are certainly not paying any LESS are we? Where does it all go?

All those services were delivered by spending more than was earned and borrowing up to the hilt. At some point the credit train was going to stop and be expected to repay the debt.

If you consistently spend 110% of your income by borrowing 10% more than you earn then you'll be able to live better than you should. When you hit your credit limit then you're going to need to repay it and your extravagant lifestyle will have to be curtailed despite needing to spend as much.

Just think of it on a macro scale.

[Burwood]

JacquesMesrine said:

Burwood said:

You don't seem surprised or think it's a problem.

A 15% reduction in waste / unnecessary expenditure is a positive move. You should be applauding it as a first step, not dismissing it out of hand.

I'm not sure what you're referring too Jacques...what 15%

[JacquesMesrine]

Burwood said:

JacquesMesrine said:

Burwood said:

You don't seem surprised or think it's a problem.

A 15% reduction in waste / unnecessary expenditure is a positive move. You should be applauding it as a first step, not dismissing it out of hand.

I'm not sure what you're referring too Jacques...what 15%

The 15% reduction stated below.

Devil2575 said:

Burwood said:

Yeah like the NHS can't save a bean. What was the telephone number in savings considered feasible. We need far more austerity, pension reform. 40% of council tax pays the staff pensions. Madness.

34% by 2019 IIRC

http://www.thisismoney.co.uk/money/news/article-30...

[Ken Figenus]

JacquesMesrine said:

All those services were delivered by spending more than was earned and borrowing up to the hilt. At some point the credit train was going to stop and be expected to repay the debt.

If you consistently spend 110% of your income by borrowing 10% more than you earn then you'll be able to live better than you should. When you hit your credit limit then you're going to need to repay it and your extravagant lifestyle will have to be curtailed despite needing to spend as much.

Just think of it on a macro scale.

Well put. My Dad would kick their ar$es for spending more than they earnt. Its such a basic! I despair our absurd collective overdraft - Labour fiddled as Rome burnt.

[mph1977]

Burwood said:

Yeah like the NHS can't save a bean. What was the telephone number in savings considered feasible. We need far more austerity, pension reform. 40% of council tax pays the staff pensions. Madness.

the council tax vs pension figure is bunkum as has been proven time and time again - it;s pure dog whistle politics material.

the NHS can save loads but it needs someone to have the testiciaulr fortitude to do two things

1. put it at arsm length from minsters etc ( but that won;t go down well - lkook at the BBC)

2. a night of the long knives round the shag pile carpeted corridors of power in trusts, variopus other bodies and event some of the CCGs ( who are repeating the mistakes of the PCTs)

[Toltec]

JacquesMesrine said:

Your posts are too long.

I'll deal with the flipping piece. What if I've moved area with my job? how is that fair on me that Johnny Benefit Scrounger can get it totally free of IHT because he's milked the system whereas I've worked hard and haven't?

Your choice, move and find a new job or pay the extra tax, your choice.

The chance of a scrounger, your words not mine, having a rich relative willing to leave them money aside, at least they won't be a scrounger anymore. They will probably mess up and end up losing it all anyway, their choice.

JacquesMesrine said:

The wealthy person vs you is simple. They have paid more tax in the to lifetime due to their higher income, so that levels the playing field. Now you're both dead you have the same starting point. Both of you have sat back and watched your house sky rocket in value by doing bugger all, other than living there. Taxing it if it's valued at a figure that is more than 7 times the average UK house price is very fair.

Not exactly which bit this refers to, my posts are too long...

Let's say the Telegraph couple, they have money worries, I don't, if their income dries up for a few months they are knackered, I'd probably finish my kit car then at some point look around for a job I fancied doing. Told you, not at all jealous of their income. I managed to build two extensions on my house, one of which was 90% my labour, while sitting on my arse letting the value go up. Not sure where the seven times came from either, more like two to three and probably below average value for the area and size.

As I said earlier, we can pay the IHT, just annoyed that a promise reneged on and timing is going to cost us several years earning. I can sympathise with people that cannot afford it and have to sell at a loss while grieving, for people that lose someone a few days or weeks early it is going to be a horrible double blow.

JacquesMesrine said:

All those services were delivered by spending more than was earned and borrowing up to the hilt. At some point the credit train was going to stop and be expected to repay the debt.

If you consistently spend 110% of your income by borrowing 10% more than you earn then you'll be able to live better than you should. When you hit your credit limit then you're going to need to repay it and your extravagant lifestyle will have to be curtailed despite needing to spend as much.

Just think of it on a macro scale.

Something we agree on at least, I wouldn't mind paying IHT so much if it wasn't just getting thrown away on interest payments. The whole economy seems to be pushing towards everything being rented rather than owned, the ephemeral is king. From a certain point of view I can see how this of benefit as value tied up in property is not flowing around the system generating tax revenue and constantly upgrading keeps manufacturing running. Discussion for another thread, someone mentioned my posts are too long. Stay well, enjoyed a good exchange of views without it descending to name calling.

[JacquesMesrine]

Average house price across the UK not average for your area.

[Toltec]

JacquesMesrine said:

Average house price across the UK not average for your area.

I thought perhaps we had finished.

It is possibly about 30% larger than the UK average too so probably only about double the UK average price for a house of its size.

I did a little checking on historic house prices.

When we bought it fourteen years ago it was about 2.2 times the average UK price and now it is about 2.5 (Zoopla estimate) so it has gone up a bit over the average increase, however if you factor in the cost of extensions then gain is much closer to being same increase as an average house. To put it another way my investment has not increased proportionally that much more than anyone else's.

So much for making huge amounts for nothing compared to the downtrodden masses. The areas that have made large increases are the ones that were originally seen as undesirable places to live, so people buying their council houses in inner London boroughs have made a real killing.

[JacquesMesrine]

Toltec said:

I thought perhaps we had finished.

It is possibly about 30% larger than the UK average too so probably only about double the UK average price for a house of its size.

I did a little checking on historic house prices.

When we bought it fourteen years ago it was about 2.2 times the average UK price and now it is about 2.5 (Zoopla estimate) so it has gone up a bit over the average increase, however if you factor in the cost of extensions then gain is much closer to being same increase as an average house. To put it another way my investment has not increased proportionally that much more than anyone else's.

So much for making huge amounts for nothing compared to the downtrodden masses. The areas that have made large increases are the ones that were originally seen as undesirable places to live, so people buying their council houses in inner London boroughs have made a real killing.

I'm sorry, I'm thoroughly confused now. Is this your house or your parents house that we're talking about? It seems like we've moved onto your house, with the comment about "when we bought it....."

If so, then at c£450,000 (around 2.5 X average house precise) then you've got little to pay on there currently and likely to be £0 if you can survive a few years and then there's virtually no chance of you ever having to worry about it.

If it's your parents' then you may be able to use both parents allowances together and zero the allowance (not sure of the rules on this so happy to be corrected). Otherwise, yes you do have some to pay, but surely having 89% of £450k is better than the (up to) 100% of £325k that most others get.

[Toltec]

JacquesMesrine said:

I'm sorry, I'm thoroughly confused now. Is this your house or your parents house that we're talking about? It seems like we've moved onto your house, with the comment about "when we bought it....."

If so, then at c£450,000 (around 2.5 X average house precise) then you've got little to pay on there currently and likely to be £0 if you can survive a few years and then there's virtually no chance of you ever having to worry about it.

If it's your parents' then you may be able to use both parents allowances together and zero the allowance (not sure of the rules on this so happy to be corrected). Otherwise, yes you do have some to pay, but surely having 89% of £450k is better than the (up to) 100% of £325k that most others get.

It was a comment about average house prices, just because you live in a London borough and your house is worth more than one in e.g. Sheffield does not mean you have made more over time. You seemed to be under the impression that the south east makes far more on house prices inflation than anywhere else.

The house being inherited is valued over £800k, a little smaller than ours and well below average price for the area. They had it built in the fifties so when I said it was the family home I didn't mean it was the house they have lived for a few years. As I said, we are fortunate that we will be able to keep it. It is just that the IHT is so much that I will not have earned it back for many years past the date at which any would have been payable.

[JacquesMesrine]

Toltec said:

It was a comment about average house prices, just because you live in a London borough and your house is worth more than one in e.g. Sheffield does not mean you have made more over time. You seemed to be under the impression that the south east makes far more on house prices inflation than anywhere else.

The house being inherited is valued over £800k, a little smaller than ours and well below average price for the area. They had it built in the fifties so when I said it was the family home I didn't mean it was the house they have lived for a few years. As I said, we are fortunate that we will be able to keep it. It is just that the IHT is so much that I will not have earned it back for many years past the date at which any would have been payable.

Of course it does. It means exactly that. I live in the North, my brother in Surrey. I bought a house for £500k in 2004 and spent £100k on it, I sold it last year for £650k. So a rise of £5k a year. He bought for £350k in 2011 and sold it last month for £550k so a profit of £40k a year. House price inflation in London and the SE is out of control, it is nowhere near that in the majority of the rest of the UK.

I'm still confused by your situation. You have your own home, which I'm assuming is c£800k too as it's a bit bigger, yet you earn around £30k. How have you managed that without house price inflation? We are all unlucky with timings. I've accrued a nice property portfolio over time and my five year plan had this year mapped out to buy a further 5. Unfortunately, I'm going to be caught out by the changes to Buy to Lets. Had I done this last year, then the changes wouldn't affect me as I'd be over 15 properties.

Some gain, some lose with changes. Life's not fair.

[Burwood]

Not at all, house price inflation in your example is just terrible. It's reasonable in surrey, presently.
5k a year, really and you seriously think that's acceptable given the capital cost. Don't tell me you expected zero.

[singlecoil]

Burwood said:

Not at all, house price inflation in your example is just terrible. It's reasonable in surrey, presently.
5k a year, really and you seriously think that's acceptable given the capital cost. Don't tell me you expected zero.

There's really no inherent reason why house prices should continually rise, as if anyone buying one should expect a capital gain, because they are also buying somewhere to live. If they also buy something to drive they can expect the value of that purchase to go down.

[JacquesMesrine]

Burwood said:

Not at all, house price inflation in your example is just terrible. It's reasonable in surrey, presently.
5k a year, really and you seriously think that's acceptable given the capital cost. Don't tell me you expected zero.

I don't care whether house price inflation on my personal in zero, in fact I'd like to to be. It's a home, not an investment. The 0% inflation would've put me on a much stronger position financially, whilst moving up the chain. My first home was pretty static, ,my second doubled in value in 5 years from £125k to £250k. That sounds great until you factor in that the house I was moving to had obviously also doubled in value. That meant the delta between the two was £250k rather than the. £125k that it was 5 years earlier.

Surrey inflation is farcical. £1.2m for a reasonably sized 4 bed detached needing a lot of work. That's a joke

You lot banging on about how much your home has risen in value is farcical, you can't pull a brick out of the wall and spend it in the pub. It's a fixed asset, drawing capital out is an emotional matter and selling it is also an emotional matter. Few people spend years in a home and then can walk away from it, very much as the overly emotional opinion son IHT are demonstrating.

[Burwood]

singlecoil said:

Burwood said:

Not at all, house price inflation in your example is just terrible. It's reasonable in surrey, presently.
5k a year, really and you seriously think that's acceptable given the capital cost. Don't tell me you expected zero.

There's really no inherent reason why house prices should continually rise, as if anyone buying one should expect a capital gain, because they are also buying somewhere to live. If they also buy something to drive they can expect the value of that purchase to go down.

I never said any such thing. It's 11 years and the poster hopes his gain is zero on his home but invests in taxable buy to let's. Seriously, my head is spinning. I've never read such drivel.

[Burwood]

Why do you think people live in Surrey, Jacques? Do you think most are just snobs who ride horses about and drive range rovers, play polo. Perhaps they have a career nearby (in London perhaps). What would you do if you had a great career in London. You wouldn't live up north would you. Everyone is free to choose where they live but to label others' choices as being crazy is a bit odd.

Property appreciation isn't a London thing. In Auckland NZ, real estate is now as expensive as london. I believe it has gone up 40% in the past 12 months or so. (on average). Sydney, the same.

[HotJambalaya]

JacquesMesrine said:

I don't care whether house price inflation on my personal in zero, in fact I'd like to to be. It's a home, not an investment. The 0% inflation would've put me on a much stronger position financially, whilst moving up the chain. My first home was pretty static, ,my second doubled in value in 5 years from £125k to £250k. That sounds great until you factor in that the house I was moving to had obviously also doubled in value. That meant the delta between the two was £250k rather than the. £125k that it was 5 years earlier.

Surrey inflation is farcical. £1.2m for a reasonably sized 4 bed detached needing a lot of work. That's a joke

You lot banging on about how much your home has risen in value is farcical, you can't pull a brick out of the wall and spend it in the pub. It's a fixed asset, drawing capital out is an emotional matter and selling it is also an emotional matter. Few people spend years in a home and then can walk away from it, very much as the overly emotional opinion son IHT are demonstrating.

So lets ignore houses, lets look at Jeff who earns millions, pays his income tax, but only ever rented a home. He pops his clogs leaving all of his taxed cash in the bank to be left to his kids. What possible justification are you going to give now for 40% of that being nicked? -hint, "well whatever they get is a decent enough chunk so why not take some?" is not an intelligent response.

[TwigtheWonderkid]

HotJambalaya said:

So lets ignore houses, lets look at Jeff who earns millions, pays his income tax, but only ever rented a home. He pops his clogs leaving all of his taxed cash in the bank to be left to his kids. What possible justification are you going to give now for 40% of that being nicked? -hint, "well whatever they get is a decent enough chunk so why not take some?" is not an intelligent response.

Why should Jeff's kids pay no tax on money they haven't earned, when everyone has to pay tax on money they have earned?

And why is everybody so obsess about paying tax on previously taxed money. I pay vat, fuel duty, insurance premium tax, council tax, road fund licence and many other taxes, all on money I've already been taxed on. That's the way it works.

[Toltec]

JacquesMesrine said:

Of course it does. It means exactly that. I live in the North, my brother in Surrey. I bought a house for £500k in 2004 and spent £100k on it, I sold it last year for £650k. So a rise of £5k a year. He bought for £350k in 2011 and sold it last month for £550k so a profit of £40k a year. House price inflation in London and the SE is out of control, it is nowhere near that in the majority of the rest of the UK.

I'm still confused by your situation. You have your own home, which I'm assuming is c£800k too as it's a bit bigger, yet you earn around £30k. How have you managed that without house price inflation? We are all unlucky with timings. I've accrued a nice property portfolio over time and my five year plan had this year mapped out to buy a further 5. Unfortunately, I'm going to be caught out by the changes to Buy to Lets. Had I done this last year, then the changes wouldn't affect me as I'd be over 15 properties.

Some gain, some lose with changes. Life's not fair.

Your brother bought at the right time, prices had been fairly stable for several years, you need to average over a longer period to damp out the spikes.

My house is c£500K, different area so worth less, half a mile in a one particular direction and it would be at least £800K. Then it would have cost the same sort of ratio more when I bought, which would have meant getting a mortgage.

The Buy to let changes are only a problem if you use mortgages and game the system by using the tax rebates to make it work profitably, I'm quite glad now we didn't do that. I also don't have a problem paying capital gains on property investments, after all you are getting a profit from the rent already.

Your earlier point about not being able to sell a few bricks is the key, a house is only worth something when you sell it, until then it is somewhere to live, that is why the option to flip seemed reasonable. After all MPs got to do it for their expenses...